Giving People Money is More Effective for Mental Health Than Brief Therapy

A new study found that direct payments improved psychological well-being for those in poverty, while five weeks of therapy did not.

Peter Simons
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A study with 5,756 participants from rural Kenya found that money, not therapy, was needed to improve psychological well-being. The researchers report:

“Our main finding is that after one year, cash transfers have larger effects on economic and psychological well-being than the […] mental health intervention, which itself produces no improvements relative to control.”

The researchers compared four groups:

  1. People given cash transfers.
  2. People given five weeks of therapy.
  3. People given both cash transfers and therapy.
  4. People given none of the interventions (control group).

The cash transfer consisted of 485 US dollars (which has the purchasing power, in rural Kenya, of 1076 US dollars). The researchers note that the per-household cost of the cash payments was less than the per-household cost of the five weeks of therapy.

According to the researchers, after one year, therapy had made no difference compared to the control group, but the cash transfer had increased psychological well-being and increased economic outcomes. The group that received both therapy and money had similar outcomes to the group that received only money—suggesting that therapy did not add anything useful.

“One year after the interventions, cash transfer recipients had higher consumption, asset holdings, and revenue, as well as higher levels of psychological wellbeing than control households. In contrast, the psychotherapy program had no measurable effects on either psychological or economic outcomes, both for individuals with poor mental health at baseline and others.”

The researchers were Johannes Haushofer at Princeton University, Robert Mudida at Strathmore Business School, Kenya, and Jeremy P. Shapiro at the Busara Center for Behavioral Economics, Kenya. The article describing the study is a working paper for the National Bureau of Economic Research, which has not been published in a peer-reviewed journal.

Problem Management Plus therapy demonstration from the World Health Organization

One limitation of the study was that five weeks of therapy is a short duration and might not be long enough for positive effects to arise. However, the type of therapy used was “Problem Management Plus,” recommended by the WHO as the “flagship” psychotherapy for low-income settings. Trained community health workers delivered it. Thus, the researchers did pick the most highly recommended and supposedly effective therapy for this situation.

It is also possible that any effects of psychotherapy had dissipated by the one-year follow-up time period. Perhaps psychotherapy has a positive effect, but it simply does not last as long.

However, this still provides a powerful contrast since the less-expensive intervention of direct cash payments did provide positive outcomes that lasted until the one-year follow-up.

The study was also limited in its focus on people in rural Kenya, all living in poverty. It is unclear if the same effects would be found in a high socioeconomic status population or a Western population.

However, the study’s findings are consistent with previous research. A study in Lancet Psychiatry found that rising unemployment rates were linked to increased suicide rates; another study found the same result for economic deprivation more generally. Yet another study found that each successive step of increasing exploitation of workers (such as overwork and wage theft) tripled the risk of psychiatric diagnosis.

This is not even the first study to try giving people money to improve outcomes: A 2015 study found that giving people in poverty about $73 per month was associated with improved outcomes.

And as for whether psychotherapy is effective for people in poverty: A recent study found that people living in poverty had poorer outcomes from psychotherapy, which supports the current finding that therapy was insufficient for improving people’s wellbeing.

The implication is that talking with a psychotherapist can do little when people are deprived of the basic necessities of life. Money is a far more powerful tool in improving life.

 

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Johannes Haushofer, Robert Mudida, and Jeremy P. Shapiro. (, 2020). The Comparative Impact of Cash Transfers and a Psychotherapy Program on Psychological and Economic Well-being. NBER Working Paper No. 28106. JEL No. C93,D90,O12. DOI: 10.3386/w28106 (Link)

36 COMMENTS

  1. I hope this work gets interpreted correctly.

    While it clearly demonstrates the benefits of at least one kind of therapeutic intervention to be zero, it does not explore the full range of different ways to alleviate what was evidently bothering these people the most – living in poverty.

    While the financial pressures associated with poverty can be relieved through government payments, the emotional and economic pressures associated with poverty cannot be. Thus, we don’t know from this study if providing a person with a reasonably secure and well-paying job would be even more emotionally beneficial that simply being paid not to work. It would certainly be more economically beneficial, as every job in theory translates to production in economic terms, while charity payments translate only to consumption, or expense.

    Also, while the emotional effects of reliance on government charity (or any form of charity) have not been much investigated as far as I know, there is voluminous argument that being actually employed is more psychologically beneficial than simply getting paid as if you were employed.

    • Still lacking nuance. Unemployment is actually better for ones health than a bad job.

      https://fortune.com/2017/08/16/bad-job-worse-than-unemployment/

      “ Being in poor-quality work which, perhaps, is boring, routine or represents underemployment or a poor match for the employee’s skills is widely regarded as a good way for the unemployed to remain connected to the labour market – and to keep the work habit. But Butterworth’s data contradicts this. The HILDA data shows unambiguously that the psychosocial quality of bad jobs is worse than unemployment. Butterworth looked at those moving from unemployment into employment and found that:

      Those who moved into optimal jobs showed significant improvement in mental health compared to those who remained unemployed. Those respondents who moved into poor-quality jobs showed a significant worsening in their mental health compared to those who remained unemployed.

      So now we have a slightly different answer to the question about the unemployed being better off in work. Yes they are, as long as they are in good-quality jobs. If they are in bad jobs, there is a perversely strong chance that they will be worse off – especially in terms of their mental health.”

      https://theconversation.com/any-job-isnt-necessarily-a-good-job-for-people-out-of-work-35217

      Income sharing for those in lower paid positions to be supported by those with higher paid positions, as well as cutting out unnecessary positions, and reducing the workload for everyone are better answers than simply having any job that may be available.

      https://www.ic.org/incomesharing/

      https://neurosciencenews.com/psychology-working-less-15361/

      • Thank you for this, kindredspirit. I was considering taking a job that I knew I would hate just to get some money rolling in and now I am reconsidering. After reading these articles, I now think now it might be better to take a little bit more time and look elsewhere.

      • In the UK a few years ago the government kept banging on about how employment was good for people’s mental health. They used this to push conditionality, where by people had to go to ridiculous lengths to look for jobs, applying for 30 jobs a week for example and going on mickey mouse training courses, to get benefits. If they don’t comply they are sanctioned. So thanks for unearthing this research to show that this is all built on a lie.

        • Thanks for this info John that illuminates the reality and I find it abusive that they do this to people. It is a cycle of hopelessness and despair. Psych decided that hopelessness and despair are “mental illnesses”.
          Genetic in nature. Chemicals imbalanced.
          If I get orange colored chemicals and reduced brain size from this kind of “job treatment”, the problem must be genetic. And there are pills for that, but you must be on the pills to get enough money to get a room in a rooming house.

        • John, I don’t understand your reasoning. Working is the traditional way to make money. What the findings say is that having money is more therapeutic than the “therapy” you would spend that money on.

          So, while “get a job to stay mentally fit” might be a bit over-simplified, prosaic, and misapplied by bureaucrats, it is a lot closer to the truth than “get therapy to stay mentally fit!”

  2. What are we doing with an economy full of bad jobs? If this place were a little saner, employers would care more about the quality of the jobs they offered to people. But people can’t wait to choose a better job if they need income now.

    Stealing from some people in order to keep others unemployed because they can’t find a “good” job only works if there are a lot more jobs than people seeking work or if you think that the people working are somehow morally deficient and thus need to be stolen from in order to provide charity for choosy job seekers.

    I’m sorry if this sounds a little “harsh.” But we are living in biological bodies on planet earth! I’m sure there are a lot of people out there who wish this weren’t so, but it’s a basic fact that tends to prevent life from being fun and rewarding all the time. A saner planet, however, would be a happier planet. We are here to attest that the “mental health system” is not achieving that. In fact, it would probably be more easy to achieve if said system were totally nonexistent.

    • “ Stealing from some people in order to keep others unemployed because they can’t find a “good” job only works if there are a lot more jobs than people seeking work or if you think that the people working are somehow morally deficient and thus need to be stolen from in order to provide charity for choosy job seekers.”

      I have no idea why you keep referring to wage equity as ‘stealing’ and ‘charity’. Or why you believe that paid employment is the only valid kind of work. This attitude culturally is part of the problem. My own household which includes four adults as well as children only has two wage earners. One of those makes SIX TIMES the pay for less than HALF of the hours the other wage earner makes, and the lower paid earner has an extremely physically demanding job Where yes he is exploited. One “unemployed” adult cares for the children and part of the home while I do the vast majority of literally everything else that has to be done around here, including cooking, cleaning, maintenance inside and outside, gardening, paying bills, sewing, fermenting, organizing, chauffeuring, liaising with all outside utilities and contractors, vehicle maintenance, backup childcare, etc. We are ALL busting our butts on a daily basis and we all split the take, more or less. There is no charity here. And there’s no reason this can’t work for others except that we’ve built up an incredibly selfish economic system with slogans like ”I built this” which allows the well off to complain about taxation while ignoring all the necessary but unseen work and infrastructure that makes their lifestyles possible. We’ve been propagandized to compete and compare instead of sharing in a more egalitarian way.

      If income sharing isn’t for you, I’m happy to see a resurgence of the labor movement and a revival of #wagesforhousework so that we can value all work fairly and not just that which is currently exchanged for money. There’s no reason for some people to work easy jobs for a lot, some to work hard jobs for a little, and some to bust their ass day in and day out for this kind of social stigma.

      • Because it is. “Wage equity” is the criminal’s code phrase for stealing.
        Paid employment is not the only valid kind of work, but money is the only valid medium for survival for most people. If you don’t live in a society where money is required to survive, that doesn’t mean that no one has to work…unless you are living in a spirit world that doesn’t rely on biology.

        The highly disproportional incomes we often see for work these days do not justify stealing and government handouts. They do point to a broken system. We are facing, currently, a lot of broken systems. But let us not choose “solutions” that only further undermine basic human rights. Basic human rights are not respected because we give too many criminals too much control. That’s my thesis and that’s what I think needs to be fixed. If you use criminal means to handle criminality, that doesn’t result in less criminality, does it?

        • Isn’t it a form of stealing not to pay people wages that reflect the actual value of their work? Why do the well off get to blame it on a broken system, when those whose lives are being stolen from then via the wage slavery this broken system rewards don’t have that luxury.

          • Whose going to determine the “actual value” of their work? A technocrat?
            Where I used to work, everyone got paid the same. Executives and clerks. Rewards for taking on more responsibility or doing very well on one’s job were either given as bonuses or in some other form of recognition. Management recognized that everyone had basically the same living expenses, so why pay some a lot more just because they had a lot more training or whatever? Well, this worked for an enlightened group, and it would probably work more broadly. But for the whole group to decide it should work that way is a lot different than rigging up some sort of system to force people to agree on something they really think is wrong.

            Does society really need millionaires? Maybe not. It doesn’t really need poor people, either. But to say being rich is illegal the way we now say being poor is illegal I don’t think will get us where we really want to go.

            This is a website about mental health, for goodness sake. And how people live together has something to do with their mental and spiritual states, which could almost certainly be improved. Imposing “equity” on a society that can’t agree to it results in something like the old Soviet Union. Or maybe modern China. Do we really want that result?

          • I think you get my drift. People should be paid relative to their contributions. There is no “law” to determine this – it is a matter of personal and group ethics, a subject that sorely needs more study and commitment, obviously. So I agree, spiritual growth is at the center. We don’t need a society where some group enforces the rules on value of work, we need a society where those who are in management recognize and reward the contributions of those who contribute well, or better yet, a collective-type workplace where the group agrees on what people get paid for what work. But that takes emotional/spiritual work and courage, and that seems in short supply in our industrialized, corporatized society.

          • You understand that there is a current “law” about how much you will get paid. This is the “law” of free markets. A lot of people swear by this and say it is the best a human society can do. Maybe. Of course, there are other factors at work that distort or evade this “law.”

            The idea is that we all offer ourselves on the “labor market” and employers make offers according to supply and demand.

            I’ve never been comfortable with reducing people to a commodity like oil or cow carcasses or something like that. As people, it seems we should treat ourselves with a little more compassion than that. The “logic” of the business world seems to be preventing these more humane urges from rising to the top.

            But I’m not ready to blame industrialization, or corporate structures, or capitalism or anything like that for the mess we are in today. There were a LOT of people just being too complacent, and willing to tolerate human suffering right in front of their eyes without doing anything effective about it. That is the world we live in. But that nastiness, the tendency to withhold our compassion, I believe is driven my the criminals on this planet. So my suggestion is to concentrate on getting that whole problem under control. I firmly believe that things will work out better if we can get crime under better control in our society. And I mean criminal insanity, the real cause of real crime, not some desperate guy holding up a 7/11 because he’s addicted to cocaine.

          • The “free market” is a scam. There is no “free market” today. Even Ayn Rand agreed that “free markets” require a way to avoid monopolization. Real “Free markets” exist only in a social context, where there are rules of competition that are either agreed upon or enforceable. They seem to work well in smaller communities where there are direct and immediate consequences for mistreating community members. But to think that today’s corporate grift and corruption even vaguely approximates a “free market” is a joke. Most of those objecting to “regulations” really just want the regulations that keep them from risk-free profits to be eliminated, and love the regulations that protect their market share. There is a sociopathic drive to “profit” regardless of the social effect, or even the legitimacy of the product, as psych drugs definitively prove. The Koch Brothers, supposedly super-advocates for the “free market,” advocated for increasing taxes on rooftop solar in Oklahoma the minute it started threatening their profits. This kind of thing happens all the time.

            I agree that complacency is a huge part of the problem. Unfortunately, a lot of complacency is disguised apathy by people who don’t see any way to “win” or even break even in the current economic structure. The “criminals on the planet” are running the show, whether through manipulating/corrupting government officials, controlling media messages, undercutting or buying out the competition, destroying small farms/businesses with the assistance of the government, and so forth. How much can even the most vigorous individual do against the evil of Novartis or Monsanto? To challenge this requires organized resistance, no matter how spiritually aware and capable the individuals are. Where does this organizational energy and MONEY come from?

          • I disagree Steve. The concept of money and financial value has corrupted the fact that we all have inherent worth and we all contribute in unique ways. A software engineer is not worth more than a janitor or a garbage man or a grocery stocker or cashier. This is the whole crux of the class system – that some people are worth more than others. Not everyone has the ability to be a pilot or a doctor but we sure know the value of quality construction workers when a building or bridge collapses. Road crews risk their lives daily to build and maintain our roads. And we often send prisoners to do cleanup on the sides of busy highways, which will tell you hw much we value that job. Why do we insist on thinking that some jobs and the people who do them are inherently more valuable? Everyone who isn’t in a coma contributes *something*. Without farmers, there would be no way to sustain our population, and yet they have some of the hardest jobs and are among those with the highest suicide rates. Every day, family farms go belly up because they can no longer compete.

            I also don’t believe in what Sanders said. That someone who works 40 hours a week should be able to afford food, rent and “basic necessities”. That’s what we have now, actually. That’s ALL they can afford. Meanwhile, those in positions we value more have jewels, high end cars, fancy things, vacations, savings for emergencies. THAT is the problem. At the end of the day, it’s the menial jobs we actually can’t live without. The guy collecting trash and the one at the sewage plant – those are the essential workers who should be getting rewarded handsomely for the shit their shoveling. The guy in the corner office is useless when it actually comes down to human survival.

            Industrialization and automation were supposed to make life easier on us all. In many countries that has been the case. But not in the US, where we insist that working 40 hours a week should be the norm. The entire gig economy and hustle culture has sprung up out of the fact that there aren’t enough jobs with enough hours to survive on. Something has to give. Better pay and fewer hours for EVERYONE should be the most obvious first step toward bringing equity to those on the bottom performing absolutely essential work for our survival as a species. Addressing consumption and throwaway culture needs to be the next step after that if we actually want to have a planet to live on in ten years.

          • Well, I don’t disagree. I think Sanders said “AT LEAST” they should be able to afford to live, and the fact is, people making minimum wage and even well above minimum wage do NOT have enough income to feed and shelter themselves and their families. Clearly, that is a VERY low bar, and yet we fail to achieve it. So yes, something is drastically wrong with a system that values real work so poorly and yet rewards screwing around in the casino of Wall Street producing NOTHING of value so well. Better pay and fewer hours for everyone should be goal #1 to help create a better society. People shouldn’t have to work three jobs to make ends meet when others make $10,000/hour or more. But try to tell that to those benefiting from the status quo.

  3. The truth is although people are motivated by different things, therapy, in and of itself, motivates no one. However, there is a significant problem with this study in that it is done amongst a very poor population in Kenya. Still, even in America, money would be a better motivator. And yes, it is vey true that a rotten job with good money is far worse than a good job or for some no job with less money. I was motivated once to receive a cash payment (well, actually ,this happened several times) for some useless study (they asked us some dumb questions) at a major university. I only did that for the money! Thank you.

    • I hear you on the criticism of the population studied, but it is in fact a replication of other studies that have been done in western countries. There have been many studies on the value of a universal basic income As well as studies on paying offenders not to commit crimes, paying drug addicts to quit their addictions and stay clean, and paying parents to go to college to transition them off welfare. Over and over and over, we’ve seen the value of giving those in struggle a helping hand, but we are a punitive culture who see some as deserving and some not. And we continue to dole out punishment to those we don’t see as deserving even though it costs more in the long run to deal with the problems that poverty and oppression directly cause.

  4. I think the point here is not that we should just give people money. It is that the stress of economic poverty is a huge causal factor in “mental illness” as “diagnosed” by the DSM. Creating a plan to deal with poverty will improve “mental heath” more than an army of therapists ever could. To paraphrase Bernie Sanders, anyone working a full time job should be able to make enough money to pay for food, shelter and the basic necessities of life. So, people should get more money as compensation for the valuable work they are already doing. If this were the case, “mental health” would improve dramatically, as well as the economy expanding due to more people having disposable income. No “communism” necessary!

    Or course, the “mental health” industry will object to any such efforts, as they will lose clients and income. But we can come up with re-education programs to train them to become more productive contributors to society. And those rich criminal types (not all rich people, but a large subset who are getting paid lots for doing little) who are skimming money off the top while producing little to nothing will, of course, object strenuously, but what do we expect from non-productive criminals?

    • The major point I took away is that giving the person the same amount of money (or even less) than it costs to provide therapy instead of therapy has larger benefits than just therapy.

      Everyone’s health insurance/care costs would decrease if we just gave people money instead of paying $6,000 a year per person for mental health services. The economy would also improve as less people become disabled and unemployed because of mental health.

      People high in selfishness won’t care about fixing the system since it won’t help them. However, when doing so lowers their health care costs suddenly they have a self interest.

  5. Yes, poverty is a huge stressor. The Malthusians (or whatever you want to call them) preached that poverty was a motivator. I believe that has been thoroughly disproved.

    A sane society would establish institutions to insure that everyone was as happy and productive as they possibly could be. An insane society doesn’t care.

    Many have the idea that you can force a society to act more sane. I don’t think that’s ever been demonstrated. You can set up guidelines that help (like the founding documents in the U.S.) but that’s never enough where criminal insanity persists.

    We should be working very hard to improve society. It is done through mental and spiritual work. There is no other way that I know of. No legal structure or political mechanism has ever achieved this. We will recognize that we are spirits and that we can help each other to heal, or we can skip it and keep living the way we do now, or worse. We have a choice on this planet. That’s something new, and it’s also something that might not last forever. That’s my message.

  6. Excellent article Peter. Very important!

    “And as for whether psychotherapy is effective for people in poverty: A recent study found that people living in poverty had poorer outcomes from psychotherapy, which supports the current finding that therapy was insufficient for improving people’s wellbeing.”

    In fact, “therapy” is a horrible thing to “do” to people if you’re not helping people get real help. Therapy puts the blame on the person. Feeling shitty is what drives people to seek help for their sad feelings. How much shittier do people feel CBT’d to death. Eventually most therapy is CBT. “Change your outlook. Change your life.” There are 5 billion reasons why people seek therapy. There are very few real life approaches.
    There is indeed a lot of dishonesty in therapy. It has a similarity of the peasants seeking comfort from priests and leaving their pittance in the tray.

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